The euro strengthened against other major currencies in the European session on Tuesday, as the European Union (EU) looks into methods to increase defense spending through joint borrowing, EU funding, and an increased role for the European Investment Bank (EIB), with a view to take important decisions by June.

The ministers will talk about ways to alter EU budgetary regulations to allow for increased domestic spending held today.

Discussions are currently about expanding the current definition of defense spending, which otherwise solely includes only military equipment. Meanwhile, many nations wish to amend the current regulations that do not consider building ammunition factories or bolstering roads and bridges to allow tanks to cross as defense expenditures.

Last week, Germany announced intentions to increase defense expenditure by reforming its debt regulations and proposing to increase spending by 500 billion euros through a special fund for infrastructure.

In the European trading now, the euro rose to more than a 4-month high of 1.0905 against the U.S. dollar and a 1-1/2-month high of 0.8440 against the pound, from early lows of 1.0835 and 0.8416, respectively. If the euro extends its uptrend, it is likely to find resistance around 1.10 against the greenback and 0.86 against the pound

Against the Swiss franc and the yen, the euro advanced to a 5-day high of 0.9598 and a 4-day high of 160.46 from early lows of 0.9520 and 158.98, respectively. The euro may test resistance around 0.97 against the franc and 163.00 against the yen.

Looking ahead, U.S. NFIB small business optimism for February, U.S. Redbook report and U.S. WASDE report are due to be released in the New York session.

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